“She’s the spender.”
“We just don’t worry about the same things when it comes to money.”
Most meetings in my office are very cordial, overlaid by a sense of practicality. Couples arrive with questions and concerns they are prepared to address – for better or for worse. The dynamic is most often one of give and take.
But sometimes my meetings are uncomfortable. Contentiousness creeps in, and I find myself thrust into the role of referee and negotiator in a battle over money.
I usually start my meetings discussing jobs, retirement life, family, property, mortgages and other financial planning issues. Investments come last so that we can determine if the clients are on track to meet their goals. Along the way I ask, “How is cash flow going?” And this is where conflict can seep in.
This happened recently with one couple. The wife was frustrated. She is highly organized, a super planner, desirous of ensuring their future. She has run the numbers, trying to make the expense side match up to the income side.
The husband is much more of a free spirit. He continuously has a next project that is on his wish list, be it a vehicle, a man cave or tool shed. No sooner is one project completed, that the next is hatched. They have no children, high incomes and 15 years until retirement, so they can afford most of what they both want – eventually. But they can’t afford to do everything now and still save an adequate amount of money.
Over the years I have learned to accept my clients for who they are and to work within their personality constraints. I am not going to change Jack, as I will call him. He will always have a project that helps to define who he is and enables him to cope with life’s challenges. But that does not mean he can’t rein in some of his free spirit attitude, which he uses to defend against Jill’s desire to line up the pennies.
Jill, in turn, needs reassurance that the money will be there for their ongoing expenses and that her preferences, which benefit both of them, will not always be made secondary to Jack’s.
Where I can be helpful is in determining how much money a couple has to spend and the trade-offs involved in making their decisions. Whether a couple chooses to use a landscaper, eat out five times a week or spend more time vacationing is not mine to decide. The couple makes choices with the recognition that they may not be able to do it all. My job is to keep in focus their longer term goals and ensure that today’s decisions are made with an eye on tomorrow.
All does not always end well in my office, unfortunately. For years I sat with a couple who were so entrenched in their ways, it was painful to watch. Unlike Jack and Jill, Samuel and Serena did not have enough income to do all that they wanted to do. Both were retired. Samuel, whose paycheck had created most of the assets, controlled the purse strings and doled out an allowance to his wife. Serena resented this arrangement. Her response was to build up credit card debt to the point that Samuel had to step in, pay it off, and then reset the bar, but not before reminding Serena that he had bailed her out.
Samuel was not as unreasonable as he sounds. He was struggling to find a way to establish constraints for Serena to operate within. They had a lifestyle they wanted to maintain and insufficient assets to support that lifestyle. One partner or the other was going to have to give, and they just couldn’t agree.
In the end, our cash flow discussions were not productive. They eventually left in pursuit of greater investment returns in the hopes that the markets would make up the difference between their dreams and their assets.
Occasionally I do take sides, especially when I can remove worry from the equation.
Robert and Rachel are in their early 70s, living on pensions and Social Security. Their investments are primarily for the “what-ifs,” the unexpected and long term care. Rachel has been through a number of painful, distressing health procedures recently. It has been hard on both of them.
Usually Robert and Rachel head to Florida this time of year, but they held off making arrangements until they knew if Rachel would be able to travel comfortably. When they finally went to book reservations, prices had sky-rocketed. Rachel was adamant about not spending the extra money this year, preferring to preserve what they have for a more pressing future need. Robert wanted to give his wife a well-deserved break. I sided with Robert. This is where the present takes precedence over the future.
Disagreements aren’t always about cash flow. Couples can differ on how their money is invested. One may be concerned that the other is taking on too little or too much risk. Or the children can be an issue. How long should they be supported, especially after college?